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Utah Business

Our partners at Finicity share the ins and outs of their open-banking platform that connects customers' data to apps.

Finicity’s open-banking platform connects customers’ financial data to apps

Steve Smith and Nick Thomas are best described as fintech pioneers, two Utahns who started Finicity in 2000, a fintech company that was recently acquired by Mastercard, a Fortune 500 company doing business in 200 countries, not to mention one of the largest acquirers in Utah. 

When I asked Smith about the inspiration behind Finicity, he described it as a collision of the “old world” and the “new world.” Smith started his career in technology and quickly realized how powerful it could be when applied to daily challenges. At the same time, he was looking for an opportunity to do something that would benefit individuals and families. This is where the old world comes in, he explains. 

Early in their life, Smith’s grandparents adopted the “envelope” budgeting model. This simple model had a powerful impact on his family. “In short, a person takes the family’s income and divides it amongst a set of envelopes dedicated to family expenses,” says Smith. 

For example, you may have one envelope dedicated to food, one to clothing, and one to bills, etc. Steve loved this model and saw how it could help people get and stay on track financially. To bring this concept to life, Smith partnered with Thomas, who he worked with at another tech company. Thomas had recently co-founded the Bluetooth Special Interest Group and had launched a new wireless division at his company. “Nick has a great mind for technical innovation and a shared vision of positive contribution to the world.” 

In 2000, Mvelopes, a personal financial management application was born. Smith and Thomas went on to build integrations for individuals to share their financial data from their bank account directly to the mobile app, which revolutionized how consumers access, utilize, and permission access to their personal financial information. 

In order to launch Mvelopes, Smith and Thomas needed access to all of the financial data to empower consumers. They started initially by connecting to around 1,200 financial institutions in the US and as the years went by, they became very good at this “connectivity.” Soon, they had one of the very few fully connected open banking platforms in the world, and by 2015, they had integrated more than 10,000 banks. 

Today, they have integrations covering 95 percent of direct deposit accounts in the US, which required a tremendous amount of work to connect and maintain all of those connections. 

There was a period of time in the industry that saw friction between the data access platforms “aggregators” and financial institutions, explains Smith. However, Finicity was very deliberate in working closely with the ecosystem to ensure concerns of all parties were best addressed while always taking a consumer-centric approach to the access of data and protection of that data. 

As a result, they have a good relationship with all the players in the ecosystem and are able to provide the data needed to fuel the apps and services being created, says Smith. “One of the best outcomes of our pivot is that through open banking, we can still address our original vision of having a positive impact on the world and helping individuals, families, and businesses achieve their financial goals and attain greater financial health.”

What Finicity does for open banking 

We now know Finicity is a fintech company associated with open banking, but how does that work? “If you’ve ever split your restaurant tab using an app or accessed a bank loan without paperwork, it’s likely you’ve benefited from open banking,” says Smith. 

Finicity gives people the ability to access, control, and share their banking data with banks, lenders, or fintech which are creating next-gen financial experiences and extending financial opportunities to more people. Brands like Experian Boost, Rocket Mortgage, Stripe, and Venmo, are examples of next-gen financial apps, he says. 

According to Smith, open banking is enabling a wide range of financial products and services that are transforming how consumers manage their money, prepare their taxes, apply for loans, make real-time payments, and better understand and improve their credit. All of this is leading to more consumer choice and better experiences, along with increased financial literacy, financial inclusion, and improved financial fitness. And “Finicity has been at the center of many of these empowering experiences.”

Finicity has enabled consumers to contribute more data to their credit scores through Experian Boost and UltraFICO Score. These solutions use cash flow data explicitly permissioned by users to help them build or improve their credit and achieve financial goals. If you’ve applied for a mortgage and not provided paper copies, there’s a good chance you’ve worked with one of Finicity’s clients in mortgage such as Guaranteed Rate, Loan Depot, or Rocket Mortgage, says Smith.

Smith and Thomas are not only pioneers in fintech, they brought together multiple financial industry factions as founders of the Financial Data Exchange (FDX), a nonprofit organization operating in the US and Canada dedicated to “unifying the financial services ecosystem around a common, interoperable and royalty-free technical standard for the secure and convenient access of permissioned consumer and business financial data,” according to the site. 

Looking back, Smith and Thomas attribute Finicity’s success to building a great team, a great product, and creating a great culture. Their efforts not only revolutionized fintech, but managed to capture the attention of Mastercard, ultimately leading to the acquisition of Finicity in November of 2020. 

Finicity, the open banking unit of Mastercard, is anchored in Murray, Utah, and currently has nearly 900 employees globally. Having added nearly 300 people to the team since the first of the year, and there remain a significant number of open positions as part of the worldwide open banking effort at Mastercard, including continued growth of the team here in Utah.

With a commitment to continue growing the open banking team in Utah, Mastercard’s overall mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart, and accessible. Using secure data and networks, partnerships, and passion, our innovations and solutions help individuals, financial institutions, governments, and businesses realize their greatest potential.

“With the growth of tech and its long history as a center of innovation for financial services, Utah has become a hub of fintech activity and success. Increasing levels of venture and growth equity funding along with innovative educational programs like those being pursued at the University of Utah will create an even richer environment and future for Fintechs in Utah,” says Smith. 

Utah has always been a hub of innovation, says Thomas. It is also a hub of service. Most new innovations are sold early stage to larger companies because the interests of the stakeholders has been to create sufficient wealth to turn and focus on their families and giving back. 

“While service will continue to be core to Utah culture, I believe we will begin to see more multi-generational companies start, grow, and go public in Utah. Finicity created dozens of new millionaires in Utah and that capital will continue to recycle inside the state to fund new ventures and perpetuate the cycle. Utah is truly ‘blossoming as a rose,’” says Thomas. 

If you’re starting a tech company, Thomas says to always prioritize relationships with yourself, your significant other, your children, your extended family, and your friendships over your startup and work relationships. “When you’re home, be present at home. When you’re at work, be present at work. Remember: Most successful startup entrepreneurs fail in their personal lives due to lack of prioritization and active investment in time and focus.” 

Smith’s advice to tech startups is to find an opportunity to create innovation that reduces friction or cost or creates innovative products or solutions that have the potential of increasing access to capital and/or high-quality financial services for the masses, small or medium-sized businesses, or major disenfranchised groups. “With this as your purpose, be passionate, and laser-focused, while building a great team and culture people want to be a part of.”

My name is Elainna Ciaramella, pronounced (Elena Chairamella). I am a native of Los Angeles, but spent over a decade by the beach in South Orange County, California. After moving to sunny Las Vegas, the “Entertainment Capital of the World,” my yearning to live closer to an outdoor playground brought me to Southern Utah, where I now live a few short miles from Tech Ridge, Atwood Innovation Plaza at DSU, Dixie Technical College, and some of the best trails in the Beehive State. As a researcher, journalist and hopelessly devoted storyteller, I’ve spent many full days and long nights conducting interviews with business owners, CEOs, and C-suite executives from all over the country. My curiosity is endless and I’m always seeking information that will intrigue and inspire readers.